How to calculate your Growth Levers: four numbers beneath revenue

Most owners can name the numbers they watch. Revenue. Profit. Maybe pipeline. Those numbers matter, and they all share one trait: they tell you how things turned out. They rarely tell you why.

The Growth Levers are the few numbers underneath that explain it. They are harder to find because most companies do not track them directly. The good news is that they are usually simple to calculate once you know what to look for.

Here are four we find in most companies. They are four of the 15 Growth Levers we use, and your company may not need all four.

1. Profitable Client Retention

What it is: whether you are keeping the clients who bring the most profit.

How to calculate it: take this year's revenue from last year's clients and divide it by what those same clients paid last year. That is net revenue retention. Do the same with contribution margin, and track revenue at risk: the share of revenue from clients who are slipping or missing meetings.

An illustrative example: last year's clients paid $2.0M, and this year they are on track to pay $1.8M, so net revenue retention is 90%. That sounds fine until the clients you lost turn out to be your most profitable. Margin retention tells you whether they were.

2. Cost to Deliver

What it is: the hours and full cost it takes to serve one client, project or job.

How to calculate it: pick one unit of service, such as one client-month, one project or one job. Add up the hours and the loaded cost: pay, payroll taxes and benefits, subcontractors, software and materials. Then compare it person by person. Use the real cost, not hours multiplied by an hourly rate. The simple version tends to leave out the things that quietly add up.

An illustrative example: $240,000 of delivery cost across 40 client-months is $6,000 each. If the average client pays $7,000, the margin is thin. If one consultant delivers a client-month in 55 hours and another takes 90, the spread shows you where to look.

3. Client Capacity

What it is: how many clients your critical people can handle.

How to calculate it: for each role, take its available hours, multiply by a sustainable share for that role, and divide by the hours that role spends per client. The lowest result is your real client ceiling, whatever your total headcount says.

An illustrative example: three Directors with 1,350 available hours a quarter, a 60% sustainable share and 22 Director hours per client can serve about 37 clients. If you already have 40, growth is limited by what you can deliver, not by what you can sell. A company in that position needs a different plan than one with room to spare.

Booked hours divided by available hours is a different number: Utilization, one of the 7 Vital Signs. It tells you how busy the team is. Client Capacity tells you where the ceiling is.

4. Ideal Client Share

What it is: how much of your new business comes from your best kind of client.

How to calculate it: define your ideal client profile from your best-margin clients. Then divide the new revenue from clients who match it by all new revenue. Track the gap in margin and retention between clients who match and clients who don't.

An illustrative example: $480,000 of $800,000 in new revenue came from ideal-profile clients, so Ideal Client Share is 60%. Companies are often surprised by how much of their effort goes to clients outside the profile.

Why the order matters

Revenue is the result. Profitable Client Retention, Cost to Deliver, Client Capacity and Ideal Client Share are some of the reasons behind it. When you can see each one, you stop asking only "why is revenue flat?" and start asking "which lever is not moving?" Each lever's page shows how to calculate it, what pulling it looks like and what it costs.

If you want a longer look at choosing which levers to watch, see How to find the few Growth Levers that actually move revenue. To see which records you need, read What data you need to build a Growth Plan dashboard.

Try this with your Leadership Team

1. Pick one lever. Choose the one you suspect is holding growth back.
2. Calculate it for the last six months. A spreadsheet is enough.
3. Look at the direction. A number that is steady or slipping is worth a conversation.
4. Give it one owner. The owner reports it at the L10 meeting.

The Growth Plan we build for Launch Cohort companies does this work for you. It shows the Growth Levers that matter most for your business, where each one stands today, and how to calculate them. Any trend and forecast in it is a projection, not a promise. You can read the details in our Launch Cohort article.

One question for your next meeting

If you had to name the one number that explains why your company is growing at its current pace, which would you pick?

To see how your company compares, take the Growth Benchmark. It takes about two minutes.